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September 12, 2012

How Much Do They Make? From Presidents to Privates, Then & Now

How much better off financially are today's presidents, Supreme Court justices and bankers?

After President Obama's inaurguration in 2009, he started earning $400,000 a year. How much did Jefferson make? (Photo: AP)

With the presidential campaign kicking into high gear after the conventions, we thought it would be interesting to look at just how well compensated the commander in chief is these days compared with his original counterparts.

Along the way, we compared the wages and benefits of other political and private-sector jobs. The results aren’t perfect. After all, there are many factors that go into compensation besides straight salary.

Comparing the original 1789 annual presidential salary of $25,000 with today’s $400,000 is not as easy as it looks. The simple way is to calculate what 1789 dollars would be worth today. But over the years, Congress has added perks like expense accounts, a pension and money for staff salaries that have made the presidency more lucrative.

Accounting for all the factors is more art than science, but the results provide an interesting glimpse into how times have changed, from the earliest days of the republic.

And then there are all those modern-day federal employees below the office of the president. Much is made about how “bloated” salaries are compared to the private sector. But that depends on how you look at the data. We take a look at that issue, as well, in How Much Do They Earn? From Presidents to Privates:

President

1800: $25,000 per year Today: $400,000 per year

George Washington received $25,000 per year while holding the nation’s highest office. Since George W. Bush took office, the chief executive has been paid $400,000. That $25,000 would be equivalent to a salary of about $300,000 today. (These figures are not set in stone. One inflation calculator, at Measuring Worth, more than doubles the worth of that $25,000 today.) But Barack Obama and other recent presidents have had much more money at their disposal. For one, there’s a $50,000 expense account, as well as other money to pay for official duties like entertaining and travel. In addition, Congress has provided a generous pension and money to pay staff members during the transition back to private life. For instance, Bill Clinton is expected to receive $6 million in pension during his lifetime.

Congress

1800: $6 per diemToday: $174,00 per year

Of all the high-profile jobs in the U.S. government, this one has almost certainly seen the biggest change in pay. Even with the inflation rate accounted for, that $6 per diem only comes to about $75 today, barely enough to hit a trendy D.C. hot spot for lunch. Of course, the founding fathers never envisioned legislators working fulltime as they do now (in between raising campaign funds, that is). The compensation for senators and congressmen is so complicated it takes the Congressional Research Service 12 pages to explain it. Other benefits include health and life insurance, retirement benefits, a mileage allowance for travel to Washington for sessions, franking privileges. That’s not everything, but it’s enough to see the job pays better than it did in the 1st Congress.

Supreme Court Justice

1800: $3,500 per yearToday: $213,900 per year

The original salary of a justice on the nation’s highest court, which was the same as members of the president’s Cabinet, would be worth about $44,000 today. So there’s been a big upgrade in relative pay. Add to that access to the same health benefits members of Congress have and the compensation these days is clearly better. And then there’s the generous pension. In 1869, Congress granted federal judges full pay for their entire retirement. The idea behind that was to encourage the judges, who are appointed for life, to step down from the bench.

Army Private

1861: $156 per yearToday: $17,892 per year

Early pay for military personnel is difficult to find, although a private in the British Army during the Revolution was paid 8 pence a day. A paltry sum considering the risks. More solid data can be found for the Civil War. By then Congress had created a framework for military pay. Privates didn’t make much in 1861 (the pay translates to $3,700 today) and they don’t make much today. There are more benefits today, however. Soldiers and their families receive medical and dental care at little or no cost, as well as life insurance benefits. The GI Bill offers help paying for college for veterans. Both the Civil War vets and their modern counterparts were allotted pensions based on factors including rank and length of service.

Bankers: 19th Century vs. Today

Financial data for companies in the earliest days of the country is scarce. However, Bloomberg News Service used documents from states to put together what it called a “Fortune 500” list for the infant nation. Banks and insurance companies dominated the list, with the Bank of the United States and Bank of America (unrelated to its modern namesake) taking the top two spots. Two banks, City Bank of New York and the Manhattan Co., survive today as part of Citigroup and J.P. Morgan Chase respectively. Finding the annual salary of the early bankers was a fruitless pursuit, but the wealth they compiled was staggering. A case in point is Moses Taylor, the second president of City Bank. When he died in 1918 at 67, his net worth was $77 million (about $1.3 billion today), more than 1/1000th of GDP. That might make Citgroup’s current CEO, Vikram Pandit, envious. His net worth has been estimated at $60 million, and he has faced a lawsuit over executive compensation. He currently ears $15 million per year.

Present Day:Civil Service vs. Private Sector Employees

We wanted to see if those in the Civil Service really make out like bandits. It turns out that in literal terms, federal workers do make much more than private workers, although not double as some critics have claimed. But the comparison is not apples to apples. Most of the difference in pay, according to factcheck.org and the Bureau of Labor Analysis, is because federal jobs generally require people with higher skills and more education. Adding to the disparity has been the shift of many blue-collar government jobs to private contractors. Government workers are twice as likely to have a bachelor's degree.

Factcheck.org looked at the BLA’s statistics for 2009 and 2010 and arrived at an average salary and compensation of between $109,000 and $116,000. Drilling down further, it turns out the lower-skilled employees, such as secretaries, make slightly more in pay than their private counterparts. On the other hand, higher-skilled workers make less. The biggest pay disparity is for Cabinet secretaries, who in 2009 each earned $199,700. That is a paltry sum compared with Fortune 500 CEOs in the private sector. They earned an average of $11 million in 2009.